Sweden’s consumer price inflation likely to have accelerated sequentially in April

The Swedish consumer price inflation is expected to have accelerated on a sequential basis in April. According to a Nordea Bank research report, the CPI is likely to have risen 0.4 percent month-on-month, while the CPIF inflation is expected to have accelerated to 1.9 percent in April from March’s 1.5 percent. The figure for April is likely to have overshot Riksbank’s projection.

Prices for foreign travel are expected to have rebounded in the month, thanks to expensive Easter holidays that contribute about 0.15 percentage points to the sequentially change of CPI. Moreover, prices of other imported goods and services are likely to have risen as a lag effect of last year’s SEK depreciation.

In March, domestic inflation was unexpectedly high, owing to increased fees in elderly- and childcare, which stimulated the CPI by about 0.1 percentage point and impacts the inflation path for the remainder of the year. But, as anticipated, the book sale brought down inflation in March by about 0.1 percentage points, and book prices ought at least to be partly restored in April, stated Nordea Bank.

There are indications that prices of food are expected to rise. Food prices are therefore likely to be slightly higher in months ahead. Moreover, prices of clothing and footwear are expected to have been hiked, consistent with the seasonal pattern. Prices of electricity rose higher than expected, although with a slight downturn compared with the prior month.

“Our call for CPIF in April, with or without energy, is 0.1 percentage point higher than the Riksbank’s forecast. Our outlook for the next few months is also slightly above the Riksbank’s estimates, but substantially lower longer out”, added Nordea Bank.